Incident: On October 25, the company released its report for the third quarter of 2023. From the beginning of the year to the end of the reporting period, the company achieved revenue of 17.014 billion yuan (+6.70% year-on-year); net profit of 3.474 billion yuan (+9.47% year-on-year); net profit after deducting non-return net profit reached 3.360 billion yuan (+10.13% year-on-year). Q3 alone achieved revenue of 5.845 billion yuan (+2.24% yoy); net profit of 1,166 billion yuan (+10.57% yoy); net profit after deducting non-net profit of 1,117 billion yuan (+7.14% yoy).
Comment:
(1) Cost side optimization is improving, revenue side growth rate is stable, and performance is developing steadily from the cost side. According to the company's third quarter announcement, from the beginning of the year to the end of the reporting period, sales expenses, management expenses, R&D expenses and financial expenses were about 5.409 billion yuan, 1,676 billion yuan, 3.725 billion yuan, and -371 million yuan respectively. Single Q3 sales expenses were about 1,731 billion yuan (-8.65%, -13.79% month-on-month). Management expenses were about 592 million yuan (+20.57% yoy, +10.04% yoy), R&D expenses 1,394 billion yuan (+6.09%, +17.94% month-on-month), financial expenses of about -127 million yuan (-15.33%, -27.84% month-on-month), of which the sales expense ratio was 29.62% lower than the previous period by about 4 pcts. The management expense ratio and R&D expense ratio were 10.13% and 23.85% respectively. The increase in management expenses was mainly due to the company's share repurchases; from the revenue side, the revenue and profit for the first three quarters continued to rise year on year. Overall, the company's development was stable, and performance continued to improve.
(2) The innovation pipeline is abundant, and the company's R&D innovation pipeline covers a variety of diseases in the future. Continued clinical approval empowers the company's development, and the clinical, acceptance and listing of projects are progressing steadily, reflecting the company's strong R&D strength. In terms of segmentation, 1) Continued clinical approval, the R&D pipeline is progressing steadily, and in July, eflurofen patches, SHR-1703 injections, HRS-9815 injections, pyrrotinib maleate tablets, etc., were approved for injectable HRS-7053, September, HRS-6209 tablets, etc. Renewed approval for injections SHR-3032, injectable SHR-A1912, SHR-2005 injections, etc.; 2) Phase III clinical trials are progressing smoothly, and product launch is expected. Up to now, 6 products have entered phase III clinical trials, covering diseases such as gout, hyperuricemia, ovulation promotion, and colorectal cancer; 3) NDA acceptance continues, covering a wide range of disease fields. Up to now, 9 products have been accepted by the NDA, covering fields such as hyperlipidemia, atopic dermatitis, and type 2 diabetes. Among them, carrilizumab for injection was approved by the FDA in August Yes, it's the fourth one this year Overseas products show that the company's internationalization is advancing at an accelerated pace, and the products can be expected in the future.
Profit forecast: Considering the company's rich R&D pipeline, continuous optimization of the cost side, stable revenue and profit growth, and accelerated internationalization, we expect the company's 2023-2025 operating income to be 24.713 billion yuan, 29.351 billion yuan and 33.618 billion yuan respectively; net profit of 4.541 billion yuan, 5.751 billion yuan and 7.271 billion yuan respectively; the 2023-2025 EPS is 0.71 yuan, 0.90 yuan and 1.14 yuan respectively. The company's current stock price is 62,49,39 Double, maintaining the company's “Highly Recommended” investment rating.
Risk warning: Force majeure risks such as uncertainty about overseas listings, uncertainty about milestone payments, and industry policies falling short of expectations.